The neuroscience shows that satisfaction of the highest ranked preference does not imply the greatest hedonic satisfaction. It does not imply any hedonic satisfaction. Take a look at this paper, “Parsing Reward,” [pdf] by Kent Berridge and Terry Robinson. They report that “wanting” and “liking” have “are in fact dissociable and have different neural substrates.” Roughly, the dopamine system is more about wanting–”incentive salience”–and liking or hedonic satisfaction has more to do with opioids.
Roughly speaking, economics shows how resources can be used most efficiently to satisfy wants. It does not connect satisfying wants with hedonic satisfaction, or happiness.
UPDATE: Also related to this topic is the latest Michael Munger essay on how people mis-calculate opportunity cost.
One way to view this is as a crisis for economics, because it does not connect to hedonic satisfaction. Instead, I view it as an opportunity for the self-help industry, to teach people how to achieve greater hedonic satisfaction by better aligning their wants to what makes them happy.
I am perfectly content with economics that describes how people satisfy wants, without getting into the issue of whether satisfying wants in turn makes people happy. Hence, my position is that happiness research belongs on the self-help shelf, not the economics shelf.
In the March, 2006 American Economic Review, which has an unusually large number of articles that interested me, Daniel McFadden writes concerning Medicare Part D and behavioral economics,
leaving the large block of uninformed consumers to "sink or swim", and relying on their self-interest to achieve satisfactory outcomes is clearly unrealistic. I endorse Thaler and Sunstein’s (2003) libertarian paternalism.
(note--the version I quoted differs slightly from the printed version)
What McFadden means by libertarian paternalism is that markets can satisfy wants, but people need to be taught what to want.
McFadden views teaching people what to want as an issue of market design, so that economists and policymakers should worry about it. I view teaching people what to want as a worthwhile project, but I would keep economists humble and policymakers out of it.
For economists, it is usually not our comparative advantage to second-guess consumer choice. I think we have something useful to say about choice under uncertainty and about rational discounting of the future. But beyond that, if there is to be a "science of happiness," I am willing to let someone else be the scientist.
For policymakers, trying to second-guess consumer choice is just another excuse for mischief. The disconnect between the government's actions and individual satisfaction is likely to be as large or larger than the disconnect between an individual's wants and that individual's satisfaction.